2022 (7) TMI 711 - HC - VAT and Sales Tax

Enhancement of Turnover - absence of any material to indicate suppressed turnover of inter-state sale entered into by the assessee - rejection of Form F - all material documents had not only produced but had been endorsed by the Assessing Officer upon inspection during assessment - HELD THAT - It is settled law - for the purposes of central assessment, there must exist material with the revenue authorities to establish that goods had moved from inside the State to outside pursuant to prior contract of sale. That principle extends to cases involving estimation of turnover on best judgement basis. Thus, unless the revenue claims existence of material disclosing sale arising from movement of goods from inside the State to outside, pursuant to prior contract of sale, enhancement to turnover may not arise on best judgement assessment basis, under the Central Sales Tax Act, 1956 - The enhancement made by Assessing Authority under the central assessment, as was confirmed by the first appeal authority and the Tribunal, cannot be sustained. In the present case, there is no material existing. Serious doubt arose as to the legality and sustainability of the finding recorded by the Assessing Officer that no books of accounts had been maintained by the assessee and no details had been furnished of consignments sent to ex- U.P. principal. On that, the original records had been summoned - Upon perusal of the record, as produced, the contention of the assessee is found correct. Besides the original Form F, photocopies of the receipt/gate pass Form 9R (issued under the Mandi Adhiniyam), photocopies of the proforma invoice, bilty and stock register on Form 44 (issued under Mandi Adhiniyam) are found existing together with endorsement of the Assessing Officer. The position that existed prior to the amendment when issuance of Form F were not mandatory and, therefore, the Rules prescribed for other course to establish commission sale or to establish stock transfer etc could not have been invoked to override the change of law caused by the amendment. Thereunder, Form F was made mandatory. The alternative mode that exists for benefit of the assesse, prior to the amendment refused above, cannot now be relied to defeat the effect of amendment made. The A.Y. in question is 2003-04. Eighteen years have passed and no further enquiry appears to be necessary in face of the facts noted above. Therefore, though in such matters, normally the Court would remit the matter, at present, no useful purpose would be served in that course being adopted. It would only lead to wastage of time and effort, especially, keeping in mind the petty disputed demand of tax, not more than Rs. 2,25,000/-. The revision stands allowed.

Summary

Issues Involved:
1. Question of law regarding enhancement of turnover in absence of material indicating suppressed turnover of inter-state sale.
2. Rejection of Form F based on alleged defects and discrepancies in documents submitted by the assessee.

Analysis:

Issue 1: Enhancement of Turnover
The revisionist challenged the order of the Commercial Tax Tribunal, which partially allowed the appeal but upheld the rejection of books of accounts and enhanced the turnover. The rejection of books of accounts was primarily based on findings from a previous assessment and a penalty under the U.P. Trade Tax Act. However, no concealed inter-state sale transactions were detected, and the penalty did not pertain to inter-state sales. The court emphasized that for central assessment, material must exist to establish goods moving from inside the state to outside under a prior sale contract. Without such evidence, enhancement of turnover on best judgment basis under the Central Sales Tax Act cannot be justified. The court concluded that the enhancement made by the Assessing Authority lacked material support and could not be sustained.

Issue 2: Rejection of Form F
The second question revolved around the rejection of Form F by the Assessing Officer despite the submission of various supporting documents by the assessee. The court noted that all relevant documents, including Form 9R, bilty, challan, proforma invoice, and stock register, were produced and endorsed by the Assessing Officer during assessment. The court found the Assessing Officer's claim of non-maintenance of books of accounts and lack of details regarding consignments sent to an ex-U.P. principal to be unfounded upon reviewing the submitted documents. The court highlighted the significance of Form F as the primary evidence for inter-state movement of goods, as mandated by the Central Act. Any failure to produce Form F may lead to a presumption of inter-state sale, subject to full tax rate. The court emphasized the conclusive nature of the legal fiction created by Section 6A and upheld the importance of Form F as decisive evidence.

In conclusion, the court answered the first question negatively, indicating the lack of material for turnover enhancement, and answered the second question in favor of the assessee, emphasizing the validity of the submitted documents and the mandatory requirement of Form F. The revision was allowed, and any deposited amount by the assessee was to be refunded in accordance with the law.